C.A.: When did you start producing the Hoyo and the Punch in Honduras?

Blumenthal: Around 1969.

C.A.: But you continued to put Cuban tobacco into those cigars long
after you started making them in Honduras. Was that tobacco still part
of the original acquisition of Cuban leaf you made before the embargo
was imposed?

Blumenthal: As I told you, I had played my hunch that there was going
to be an embargo, and Angel Oliva got the Cuban tobacco for us. The
last shipment that came before the embargo was primarily for us. And
later, we bought Cuban tobacco from the Garcia y Vega company, which
had decided it didn't have enough inventory of Cuban leaf to continue
making them. They had not built up a huge inventory because before the
embargo, the price was already high, and they hadn't bought any
more. In 1965 or '66, the American Cigar Company had decided to get
rid of all of its Cuban tobacco. They were going to add a new blend,
and they sold us all their Cuban tobacco. That was a lot.

C.A.: So from the time that you guessed the embargo was coming until
after the embargo was imposed, how many cigars worth of tobacco did
you accumulate?

Blumenthal: Oh, I couldn't tell you that.

C.A.: In the millions?

Blumenthal: Many millions.

C.A.: So even after the embargo, you kept making cigars with Cuban
tobacco?

Blumenthal: We used Cuban tobacco up until 1975 in our cigars.

C.A.: Were you in effect blending, stretching, so you could say that
it had Cuban tobacco in it?

Blumenthal: Right. Our boxes all said Havana on them until the early
part of the '70s, when the government decided we couldn't use the word
Havana. We had to take Havana off, so we used the slogan, "For the man
who misses his Havana." But by that point, we had found that Honduras
and Nicaragua tobacco was similar to Havana anyway.

C.A.: Was Villazon largely responsible for establishing that good
cigars could be made outside of Cuba?

Blumenthal: We were the first ones in Honduras. And, we were the first
ones that made a strong, full-flavored cigar outside of Cuba.

C.A.: Would you say that outside of Cuba and Honduras, good cigars
were not being made at that time?

Blumenthal: The cigars that we were getting from the Canary Islands,
for instance, some were machine-made. The only ones who made a good
cigar there were the Menendez Garcia people. Most were made with the
European type of tobacco, which I call Sumatra or Indonesian
filler. It had an entirely different taste than Americans were used
to. But you have to remember that almost every cigar in the United
States that was made before the embargo was either made out of Havana
tobacco or had some Havana tobacco in it. Even the cheaper cigars. You
could buy Havana cigars for a nickel.

C.A.: So when you start coming out with these Honduran cigars, how did
you get consumers to understand that you were producing a
Havana-equivalent cigar from Honduras? Was there a lot of consumer
resistance in the beginning?

Blumenthal: No. When I started with Bances, which was a Cuban-style
cigar, there were still Cuban cigars on the market. But people liked
the cigar and they bought it. As time went on, the straight Cuban
cigars disappeared. Suddenly after the embargo, there were a lot of
new cigars on the market, a lot of cigars made in Miami in what we
call buckeye shops. There were some other cigar factories that opened
up in Costa Rica. From the Dominican Republic, the only one on the
market at that time was La Aurora, which was named after the dictator
Trujillo's daughter. Jamaica had a history of cigars; Royal Jamaica
was made there along with Macanudo. But with Cuban cigars gone from
the market, there was a need for good, full-flavored cigars. The
Bances filled a bill for people who remembered Havana. That's the only
way I can look at it.

C.A.: So people knew to look for your cigar, and they liked it? Did it
have more taste? Was it stronger?

Blumenthal: I wouldn't say it was stronger, but it had more flavor,
the aroma was better because most Sumatra cigars have a very acrid and
a very metallic taste. Our taste was closer to Cuba, and the aroma,
the bouquet of the cigar, was closer to Cuba.

C.A.: Could you explain the current corporate structure of your
cigar-related companies?

Blumenthal: Villazon and Co. is owned by Frank and myself.

C.A.: That's the parent company?

Blumenthal: That's the parent company. And Tito Gonzalez, the general
manager, is a minority stockholder. In Honduras, Frank and I own
approximately half of the factory today. Johnny Oliva has 18 or 19
percent. The balance is owned by the people who are working down
there--the manager, the assistant manager. We gave them the stock
because we felt that that was the way to keep them there, and it
worked. James B. Russell, which is another company we have, is an
importer and is now owned by Villazon and Co.

C.A.: Vilco Imports?

Blumenthal: Vilco Imports, that was an import company that imported
cigars from Jamaica, Mexico and the Philippines. We represented the
Tabacalera here in the United States. But that's now just part of
Villazon.

C.A.: How many Hoyo de Monterrey do you expect to sell in 1995?

Blumenthal: About eight million.

C.A.: Versus what in '94?

Blumenthal: Last year we sold about the same number. I don't think I
can produce any more.